Emami combats rising costs with price hikes
Fast moving consumer goods business Emami has seen rising costs and inflation squeeze its profit margins and has countered this with price increases on its products of around 4.5% with further hikes on the table.
“We have taken judicious price hikes of ~4.5% and may take further hikes in case the need arises,” Emami’s CEO of finance, strategy, and business development and CFO NH Bhansali told ET Markets in an interview. “In Q4 FY22 our gross margins at 62.4% contracted by just 30 bps on account of judicious price hikes and strategic procurements and other cost optimisation initiatives.”
The business has seen costs rise steeply on crude derivatives, vegetable oils, camphor, and packaging materials among other necessary materials. This is due to a cocktail of inflation and geo-political pressure, according to Bhansali, and is expected to continue into the 2023 financial year.
Emami is also focusing on its e-commerce operations to drive growth in a more challenging financial climate. “New-age channels like modern trade and e-commerce are growing very strongly for Emami,” said Bhansali, ET Markets reported. “In FY22, modern trade and e-commerce contributed 12.8% of our domestic sales and is still growing aggressively. Our Q4 FY22 exit contribution is above 15%.”
The business is also confident that government initiatives to raise rural spending power coupled with a good summer and monsoon season predicted will alleviate the slowdown. Emami foresees especially strong growth for its ‘Fair and Handsome’ whitening cream for men, according to Bhansali.
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